HereandNow

The 3 ways McDonald's Japan achieved its amazing recovery

V-ji kaifuku -- a V-shaped recovery -- is how Shukan Jitsuwa (Jan 11-18) describes the "astonishing" turnaround achieved by McDonald's Japan, pulling itself up from don-zoko (rock bottom). For the fiscal period ending in December 2017, the company expects to report consolidated earnings of 20 billion yen -- the highest since it began trading its shares on the Tokyo Stock Exchange.

It was around 2009 that growth began to stagnate, and business analysts observed that the company seemed to have become stuck in a rut. Then around the end of 2014, a video taken by an investigative reporter in China supposedly showed a supplier making items using meat whose "consume by" dates had expired, and in one case, minced chicken that had fallen onto the floor was scooped up being used to prepare nuggets. Once this began to circulate visitors to the golden arches plummeted.

More misfortunes occurred in the first half of 2015. Customers complained of foreign objects such as human teeth or fragments of metals found in foods, further tarnishing the company's image, and some parents went so far as to consider a boycott. By the end of 2015, the company reported a deficit for the year of 34.9 billion yen, and articles appearing in the media were raising the possibility that the brand would vanish from Japan for good.

What's more, Canadian Sarah Cassanova, McDonald's Japan CEO, was a relatively new arrival and at the time still unfamiliar with customary Japanese business practices. And the overbearing attitude shown by the U.S. parent company in dealing with customer dissatisfaction only made matters worse.

"Ms Cassanova did some serious soul-searching and made efforts to understand Japanese people," said a business analyst familiar with the company. "She took speedy action and enacted reforms, particularly in three areas. Thanks to these, the customers gradually began coming back."

The first and foremost of the three reforms was to emphasize food safety.

"Items that up to that point had been procured from China were switched to Thailand or other sources, with the data shown on the company's home page. In addition, as part of the food safety publicity efforts, the paper used to wrap the items of merchandise bore a QR (quick response) code," a source in the food and beverage industry tells the magazine.

Some former customers, however, remained unconvinced, so from summer 2016, McDonald's began a collaborative tieup, promoting the Pokemon GO virtual game via its outlets. "It's no exaggeration to say that this kind of collaboration with other companies had a big impact on attracting new business," the source continued.

The third action taken by the company management was to shut down unprofitable outlets. From 3,801 stores in Japan at the time of the sanitation scandal in China, the number was reduced by nearly 1,000, to 2,902. On a weekly basis Cassanova began making the rounds to outlets in person, talking to staff members, and customers ranging from housewives and high school students to seniors. When possible their views and suggestions were incorporated into store operations, and through repeated efforts, the company was able to pull off a "miraculous" recovery.

"Actually looking at the stagnant demand among most of the food and beverage industry, the hamburger business has shown strong resilience," the aforementioned analyst opined. "It's one genre that's doing well, including new arrivals." He cited examples of gourmet burgers such as Shake Shack and the 3rd burger, which have made recent inroads into the Japan.

"McDonald's will have to work hard to introduce appealing and tasty items, or it's possible their business will sink again," said a writer for a food industry magazine. "So I suppose that during 2018 it will aggressively launch more new collaborative efforts and open up new outlets."

The coming year, the article concludes, should see new fronts open up as Japan's "burger wars" escalate.

Jan. 1, 2018
08:08 am JST

Jan. 1, 2018
08:39 am JST

salads instead of fries

Fries was the only thing they were able to make well... and even that, they changed the recipe for terrible a decade ago. At the limit, you can eat their meals when you're stuck in an airport for too long or on the highway service area with nothing else... but why people in cities choose to eat there, and go again and again. I don't get it.

Jan. 1, 2018
05:02 pm JST

Having seen the fat or shortening they use, no thank you. Haven't had their stuff in 2 decades. Don't get me started on the actual ingredients or amount of sugar and fat. The occasional coffee (when going with someone else who needed a drink) or toilet were the only things I went there for. I just have the occasional veggie burger at Burger King back home (and that was about once every two or three years).

Jan. 1, 2018
11:47 pm JST

lost in nagoya:

I think they did introduced a vegan burger in ONE branch somewhere in the world. You'll have to google it.

And yes, we all know some people enjoy it. That's why they're making a killing. But I personally won't be sucked into it - food is not of good quality (I've worked there and I've already said my hail Marys) and they're the epitome of factory farming and its cruelty.

Jan. 2, 2018
09:12 am JST

I don't know if we are the only one in the word but we have a McVeggie here in Portugal. However it has milk and egg in it. The hamburger itself is made of vegetables and quinoa. It has more calories than a McChicken and it's deep fried. And it's crap. Only had it once. First and last time that's for sure.

Jan. 5, 2018
01:59 pm JST

Jan. 5, 2018
03:12 pm JST

I think McDonald's is the only restaurant in Japan where the pic doesn't match the product served. That double burger pic shows two pickles but they only put one on here. Chincyness (I wish that was a word) explains #'s 1, 2 & 3.